Commonwealth of Australia 2002 ISBN

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1 5HYLHZRIWKH/DZRI1HJOLJHQFH )LQDO5HSRUW September 2002

2 Commonwealth of Australia 2002 ISBN This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth available from the Department of Communications, Information Technology and the Arts. Requests and inquiries concerning reproduction and rights should be addressed to: The Manager Copyright Services Info Access GPO Box 2154 CANBERRA ACT 2601 or by Printed by Canprint Communications Pty Ltd

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9 7HUPVRI5HIHUHQFH 3ULQFLSOHVEDVHG5HYLHZRIWKH /DZRI1HJOLJHQFH The award of damages for personal injury has become unaffordable and unsustainable as the principal source of compensation for those injured through the fault of another. It is desirable to examine a method for the reform of the common law with the objective of limiting liability and quantum of damages arising from personal injury and death. Accordingly, the Panel is requested to: 1 Inquire into the application, effectiveness and operation of common law principles applied in negligence to limit liability arising from personal injury or death, including: (a) the formulation of duties and standards of care; (b) causation; (c) the foreseeability of harm; (d) the remoteness of risk; (e) contributory negligence; and (f) allowing individuals to assume risk. 2 3 Develop and evaluate principled options to limit liability and quantum of awards for damages. In conducting this inquiry, the Panel must: (a) address the principles applied in negligence to limit the liability of public authorities; (b) develop and evaluate proposals to allow self assumption of risk to override common law principles; (c) consider proposals to restrict the circumstances in which a person must guard against the negligence of others; L[

10 /DZRI1HJOLJHQFH5HYLHZ (d) develop and evaluate options for a requirement that the standard of care in professional negligence matters (including medical negligence) accords with the generally accepted practice of the relevant profession at the time of the negligent act or omission; (e) develop proposals to replace joint and several liability with proportionate liability in relation to personal injury and death, so that if a defendant is only partially responsible for damage, they do not have to bear the whole loss; and (f) develop and evaluate options for exempting or limiting the liability of eligible not-for-profit organisations 1 from damages claims for death or personal injury (other than for intentional torts). 4 Review the interaction of the Trade Practices Act 1974 (as proposed to be amended by the Trade Practices Amendment (Liability for Recreational Services) Bill 2002) with the common law principles applied in negligence (particularly with respect to waivers and the voluntary assumption of risk). In conducting this inquiry, the Panel must: (a) develop and evaluate options for amendments to the Trade Practices Act to prevent individuals commencing actions in reliance on the Trade Practices Act, including actions for misleading and deceptive conduct, to recover compensation for personal injury and death; and (b) evaluate whether there are appropriate consumer protection measures in place (under the Trade Practices Act, as proposed to be amended, or otherwise) and if necessary, develop and evaluate proposals for consumer protection consistent with the intent of the Government's proposed amendment to the Trade Practices Act. 5 Develop and evaluate options for a limitation period of 3 years for all persons, while ensuring appropriate protections are established for minors and disabled persons. In developing options the panel must consider: (a) the relationship with limitation periods for other forms of action, for example arising under contract or statute; and ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃ 1 A not-for-profit organisation in this context may include charities, community service and sporting organisations. [

11 Report Date 7HUPVRI5HIHUHQFH (b) establishing the appropriate date when the limitation period commences. The Panel is required to report to Ministers on terms 3(d), 3(f), 4 and 5 by 30 August 2002 and on the remainder of terms by 30 September [L

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13 3DQHORI(PLQHQW3HUVRQV &KDLUPDQ 7KH+RQRXUDEOH'DYLG,SS Justice Ipp has been an Acting Judge of Appeal, Court of Appeal, Supreme Court of New South Wales, since 2001 and Justice, Supreme Court of Western Australia, since He was admitted to the Western Australian Bar in 1984 and appointed as a Queen s Counsel in HPEHUV 3URIHVVRU3HWHU&DQH Professor Cane has been a Professor of Law in the Research School of Social Sciences at the Australian National University since For 20 years before that he taught at Corpus Christi College, Oxford, being successively a lecturer, reader and professor. His main research interests lie in the law of obligations (especially tort law), and in public law (especially administrative law). $VVRFLDWH3URIHVVRU'RQDOG6KHOGRQ Dr Sheldon has been the Chairman of the Council of Procedural Specialists since His particular interests are in Upper GI Surgery. 0U,DQ0DFLQWRVK Mr Macintosh has been the Mayor of Bathurst City Council in New South Wales since He also has been the Chairman of the NSW Country Mayors Association since [LLL

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15 /LVWRI5HFRPPHQGDWLRQV,PSOHPHQWDWLRQRIWKH3DQHOV5HFRPPHQGDWLRQV A national response 5HFRPPHQGDWLRQ The Panel's recommendations should be incorporated (in suitably drafted form) in a single statute (that might be styled the Civil Liability (Personal Injuries and Death) Act ('the Proposed Act') to be enacted in each jurisdiction. Paragraph 2.1 Overarching recommendation 5HFRPPHQGDWLRQ The Proposed Act should be expressed to apply (in the absence of express provision to the contrary) to any claim for damages for personal injury or death resulting from negligence regardless of whether the claim is brought in tort, contract, under a statute or any other cause of action. Paragraphs URIHVVLRQDO1HJOLJHQFH Treatment by a medical practitioner standard of care 5HFRPPHQGDWLRQ In the Proposed Act, the test for determining the standard of care in cases in which a medical practitioner is alleged to have been negligent in providing treatment to a patient should be: A medical practitioner is not negligent if the treatment provided was in accordance with an opinion widely held by a significant number of respected practitioners in the field, unless the court considers that the opinion was irrational. Paragraphs

16 /DZRI1HJOLJHQFH5HYLHZ Standard of care professionals generally 5HFRPPHQGDWLRQ The Proposed Act should embody the following principles: In cases involving an allegation of negligence on the part of a person holding himself or herself out as possessing a particular skill, the standard of reasonable care should be determined by reference to: (a) (b) What could reasonably be expected of a person professing that skill. The relevant circumstances at the date of the alleged negligence and not a later date. Paragraphs Duties to inform 5HFRPPHQGDWLRQ In the Proposed Act the professional's duties to inform should be legislatively stated in certain respects, but only in relation to medical practitioners. Paragraphs HFRPPHQGDWLRQ The medical practitioner's duties to inform should be expressed as duties to take reasonable care. Paragraphs HFRPPHQGDWLRQ The legislative statement referred to in Recommendation 5 should embody the following principles: (a) (b) There are two types of duties to inform, a proactive duty and a reactive duty. The proactive duty to inform requires the medical practitioner to take reasonable care to give the patient such information as the reasonable person in the patient's position would, in the circumstances, want to be given before making a decision whether or not to undergo treatment.

17 /LVWRI5HFRPPHQGDWLRQV (c) (d) (e) (f) The information referred to in paragraph (b) should be determined by reference to the time at which the relevant decision was made by the patient and not a later time. A medical practitioner does not breach the proactive duty to inform by reason only of a failure to give the patient information about a risk or other matter that would, in the circumstances, have been obvious to a reasonable person in the position of the patient, unless giving the information is required by statute. Obvious risks include risks that are patent or matters of common knowledge; and a risk may be obvious even though it is of low probability. The reactive duty to inform requires the medical practitioner to take reasonable care to give the patient such information as the medical practitioner knows or ought to know the patient wants to be given before making the decision whether or not to undergo the treatment. Paragraphs Procedural recommendations 5HFRPPHQGDWLRQ Consideration should be given to implementing trials of a system of court-appointed experts. Paragraphs HFRPPHQGDWLRQ Consideration should be given to the introduction of a rule requiring the giving of notice of claims before proceedings are commenced. Paragraphs RWIRU3URILW2UJDQLVDWLRQV132V No exemption for NPOs 5HFRPPHQGDWLRQ Not-for-profit organisations as such should not be exempt from, or have their liability limited for, negligently-caused personal injury or death. Paragraphs

18 /DZRI1HJOLJHQFH5HYLHZ Recreational services generally 5HFRPPHQGDWLRQ The Proposed Act should embody the following principles: The provider of a recreational service is not liable for personal injury or death suffered by a voluntary participant in a recreational activity as a result of the materialisation of an obvious risk. (a) (b) (c) An obvious risk is a risk that, in the circumstances, would have been obvious to a reasonable person in the position of the participant. Obvious risks include risks that are patent or matters of common knowledge. A risk may be obvious even though it is of low probability. Paragraphs HFRPPHQGDWLRQ For the purposes of Recommendation 11: (a) 'Recreational service' means a service of (i) (ii) (iii) providing facilities for participation in a recreational activity; or training a person to participate in a recreational activity; or supervising, adjudicating, guiding or otherwise assisting a person's participation in a recreational activity. (b) 'Recreational activity' means an activity undertaken for the purposes of recreation, enjoyment or leisure which involves a significant degree of physical risk. Paragraph HFRPPHQGDWLRQ The principles contained in Recommendation 11 should not apply in any case covered by a statutory scheme of compulsory liability insurance. Paragraph 4.24

19 /LVWRI5HFRPPHQGDWLRQV Warning and giving notice of obvious risks 5HFRPPHQGDWLRQ The proposed Act should embody the following principles: A person does not breach a proactive duty to inform by reason only of a failure to give notice or to warn of an obvious risk of personal injury or death, unless required to do so by statute. (a) (b) (c) An obvious risk is a risk that, in the circumstances, would have been obvious to a reasonable person in the position of the person injured or killed. Obvious risks include risks that are patent or matter of common knowledge. A risk may be obvious even though it is of low probability. Paragraphs HFRPPHQGDWLRQ The principles contained in Recommendation 14 should not apply to 'work risks', that is, risks associated with work done by one person for another. Paragraph 4.35 Emergency services 5HFRPPHQGDWLRQ There should be no provision regarding the liability of not-for-profit organisations as such for personal injury and death caused by negligence in the provision of emergency services. Paragraph UDGH3UDFWLFHV Part IVA 5HFRPPHQGDWLRQ The TPA should be amended to provide that the rules relating to limitation of actions and quantum of damages recommended in this Report, apply to any

20 /DZRI1HJOLJHQFH5HYLHZ claim for negligently-caused personal injury or death brought under Part IVA in the form of an unconscionable conduct claim. Paragraphs HFRPPHQGDWLRQ The TPA should be amended (to the relevant and appropriate extent) to provide that other limitations on liability recommended in this Report, apply to any claim for negligently-caused personal injury or death brought under Part IVA in the form of an unconscionable conduct claim. Paragraphs Part V Div I 5HFRPPHQGDWLRQ The TPA should be amended to prevent individuals bringing actions for damages for personal injury and death under Part V Div I. Paragraphs HFRPPHQGDWLRQ The TPA should be amended to remove the power of the ACCC to bring representative actions for damages for personal injury and death resulting from contraventions of Part V Div 1. Paragraphs Part V Div IA, Part V Div 2A and Part VA 5HFRPPHQGDWLRQ The TPA should be amended to provide that the rules relating to limitation of actions and quantum of damages recommended in this Report, apply to any claim for negligently-caused personal injury or death brought under Part V Div 1A, Part V Div 2A or Part VA. Paragraphs

21 /LVWRI5HFRPPHQGDWLRQV 5HFRPPHQGDWLRQ The TPA should be amended (to the relevant and appropriate extent) to provide that other limitations on liability recommended in this Report apply to any claim for negligently-caused personal injury or death brought under Part V Div 1A, Part V Div 2A or Part VA. Paragraphs /LPLWDWLRQRI$FWLRQV General provision 5HFRPPHQGDWLRQ The Proposed Act should provide that all claims for damages for personal injury or death resulting from negligence are governed by the limitation provisions recommended in this Chapter. Paragraphs The limitation period and the long-stop period 5HFRPPHQGDWLRQ The Proposed Act should embody the following principles: (a) (b) The limitation period commences on the date of discoverability. The date of discoverability is the date when the plaintiff knew or ought to have known that personal injury or death: (i) (ii) (iii) had occurred; and was attributable to negligent conduct of the defendant; and in the case of personal injury, was sufficiently significant to warrant bringing proceedings. (c) (d) The limitation period is 3 years from the date of discoverability. Subject to (e), claims become statute-barred on the expiry of the earlier of: (i) the limitation period; and

22 /DZRI1HJOLJHQFH5HYLHZ (ii) a long-stop period of 12 years after the events on which the claim is based ( the long-stop period ). (e) (f) The court has a discretion at any time to extend the long-stop period to the expiry of a period of 3 years from the date of discoverability. In exercising its discretion, the court must have regard to the justice of the case, and in particular: (i) (ii) whether the passage of time has prejudiced a fair trial of the claim. the nature and extent of the plaintiff's loss. (iii) the nature of the defendant's conduct. Paragraphs Suspending the limitation period minors and incapacitated persons 5HFRPPHQGDWLRQ The Proposed Act should embody the following principles: (a) (b) The running of the limitation period is suspended during any period of time during which the plaintiff is a person under a disability. 'Person under a disability' means: (i) (ii) (iii) a minor who is not in the custody of a parent or guardian; an incapacitated person (such as a person who is unable, by reason of mental disorder, intellectual handicap or other mental disability to make reasonable judgments in respect of his or her affairs) in respect of whom no administrator has been appointed. a minor whose custodial parent or guardian is a person under a disability. (c) (d) In the case of minors and incapacitated persons who are not persons under a disability, the relevant knowledge for the purpose of determining the date of discoverability is that of the parent, guardian or appointed administrator, as the case may be. Where the parent or guardian of a minor is the potential defendant or is in a close relationship with the potential defendant, the limitation period

23 /LVWRI5HFRPPHQGDWLRQV (called the close-relationship limitation period ) runs for 3 years from the date the plaintiff turns 25 years of age. (e) A close relationship is a relationship such that: (i) (ii) the parent or guardian might be influenced by the potential defendant not to bring a claim on behalf of the minor against the potential defendant; or the minor might be unwilling to disclose to the parent or guardian the conduct or events on which the claim would be based. (f) In cases dealt with in (d), the court has a discretion at any time to extend the close-relationship limitation period to the expiry of a period of 3 years from the date of discoverability. Paragraphs Survival of actions 5HFRPPHQGDWLRQ The Proposed Act should embody the following principles: (a) (b) Subject to sub-para (b), the limitation principles contained in Recommendations 24 and 25 should apply to an action brought by the personal representative of a deceased person acting as such. In such a case, the limitation period should begin at the earliest of the following times: (i) (ii) (iii) when the deceased first knew or should have known of the date of discoverability, if that knowledge was acquired more than 3 years before death; when the personal representative was appointed, if he or she had the necessary knowledge at that time; when the personal representative first acquired or ought to have acquired that knowledge, if he or she acquired that knowledge after being appointed.

24 /DZRI1HJOLJHQFH5HYLHZ Contribution between tortfeasors 5HFRPPHQGDWLRQ The Proposed Act should provide for limitation periods in regard to contribution between tortfeasors. )RUHVHHDELOLW\6WDQGDUGRI&DUH&DXVDWLRQDQG5HPRWHQHVV RI'DPDJH Standard of care 5HFRPPHQGDWLRQ The Proposed Act should embody the following principles: (a) (b) (c) (d) A person is not negligent by reason only of failing to take precautions against a foreseeable risk of harm (that is, a risk of harm of which the person knew or ought to have known). It cannot be negligent to fail to take precautions against a risk of harm unless that risk can be described as not insignificant. A person is not negligent by reason of failing to take precautions against a risk that can be described as not insignificant unless, under the circumstances, the reasonable person in that person s position would have taken precautions against the risk. In determining whether the reasonable person would have taken precautions against a risk of harm, it is relevant to consider (amongst other things): (i) (ii) (iii) the probability that the harm would occur if care was not taken; the likely seriousness of that harm; the burden of taking precautions to avoid the harm; and (iv) the social utility of the risk-creating activity. Paragraphs

25 /LVWRI5HFRPPHQGDWLRQV Causation 5HFRPPHQGDWLRQ The Proposed Act should embody the following principles: Onus of proof (a) The plaintiff always bears the onus of proving, on the balance of probabilities, any fact relevant to the issue of causation. The two elements of causation (b) The question of whether negligence caused harm in the form of personal injury or death ( the harm ) has two elements: (i) (ii) factual causation, which concerns the factual issue of whether the negligence played a part in bringing about the harm; and scope of liability which concerns the normative issue of the appropriate scope of the negligent person s liability for the harm, once it has been established that the negligence was a factual cause of the harm. Scope of liability covers issues, other than factual causation, referred to in terms such as legal cause, real and effective cause, commonsense causation, foreseeability and remoteness of damage. Factual causation (c) (d) (e) (f) The basic test of factual causation (the but for test) is whether the negligence was a necessary condition of the harm. In appropriate cases, proof that the negligence materially contributed to the harm or the risk of the harm may be treated as sufficient to establish factual causation even though the but for test is not satisfied. Although it is relevant to proof of factual causation, the issue of whether the case is an appropriate one for the purposes of (d) is normative. For the purposes of deciding whether the case is an appropriate one (as required in (d)), amongst the factors that it is relevant to consider are: (i) whether (and why) responsibility for the harm should be imposed on the negligent party, and

26 /DZRI1HJOLJHQFH5HYLHZ (ii) whether (and why) the harm should be left to lie where it fell. (g) (i) (ii) For the purposes of sub-paragraph (ii) of this paragraph, the plaintiff s own testimony, about what he or she would have done if the defendant had not been negligent, is inadmissible. Subject to sub-paragraph (i) of this paragraph, when, for the purposes of deciding whether allegedly negligent conduct was a factual cause of the harm, it is relevant to ask what the plaintiff would have done if the defendant had not been negligent, this question should be answered subjectively in the light of all relevant circumstances. Scope of liability (h) For the purposes of determining the normative issue of the appropriate scope of liability for the harm, amongst the factors that it is relevant to consider are: (i) (ii) whether (and why) responsibility for the harm should be imposed on the negligent party; and whether (and why) the harm should be left to lie where it fell. Paragraphs &RQWULEXWRU\1HJOLJHQFH$VVXPSWLRQRI5LVNDQG'XWLHVRI 3URWHFWLRQ Contributory negligence 5HFRPPHQGDWLRQ The Proposed Act should embody the following principles: (a) (b) The test of whether a person (the plaintiff) has been contributorily negligent is whether a reasonable person in the plaintiff s position would have taken precautions against the risk of harm to himself or herself. For the purposes of determining whether a person has been contributorily negligent, the standard of the reasonable person is the same as that applicable to the determination of negligence.

27 /LVWRI5HFRPPHQGDWLRQV (c) In determining whether a person has been contributorily negligent, the following factors (amongst others) are relevant: (i) (ii) (iii) (iv) The probability that the harm would occur if care was not taken. The likely seriousness of the harm. The burden of taking precautions to avoid the harm. The social utility of the risk-creating activity in which the person was engaged. (d) Whether a plaintiff has been contributorily negligent according to the criteria listed in (a) and (c) must be determined on the basis of what the plaintiff knew or ought to have known at the date of the alleged contributory negligence. Paragraphs Apportionment 5HFRPPHQGDWLRQ The Proposed Act should embody the following principle: Under the Apportionment Legislation (that is, legislation providing for the apportionment of damages for contributory negligence) a court is entitled to reduce a plaintiff s damages by 100 per cent where the court considers that it is just and equitable to do so. Paragraphs Assumption of risk 5HFRPPHQGDWLRQ The Proposed Act should embody the following principles: For the purposes of the defence of assumption of risk: (a) (b) Where the risk in question was obvious, the person against whom the defence is pleaded (the plaintiff) is presumed to have been actually aware of the risk unless the plaintiff proves on the balance of probabilities that he or she was not actually aware of the risk. An obvious risk is a risk that, in the circumstances, would have been obvious to a reasonable person in the plaintiff s position. Obvious risks

28 /DZRI1HJOLJHQFH5HYLHZ include risks that are patent or matters of common knowledge. A risk may be obvious even though it is of low probability. (c) The test of whether a person was aware of a risk is whether he or she was aware of the type or kind of risk, not its precise nature, extent or manner of occurrence. Paragraphs HQWDO+DUP Recognised psychiatric illness 5HFRPPHQGDWLRQ A panel of experts (including experts in forensic psychiatry and psychology) should be appointed to develop guidelines, for use in legal contexts, for assessing whether a person has suffered a recognised psychiatric illness. Paragraphs Duty of care mental harm 5HFRPPHQGDWLRQ The Proposed Act should embody the following principles: (a) (b) (c) There can be no liability for pure mental harm (that is, mental harm that is not a consequence of physical harm suffered by the mentally-harmed person) unless the mental harm consists of a recognised psychiatric illness. A person (the defendant) does not owe another (the plaintiff) a duty to take care not to cause the plaintiff pure mental harm unless the defendant ought to have foreseen that a person of normal fortitude might, in the circumstances, suffer a recognised psychiatric illness if reasonable care was not taken. For the purposes of (b), the circumstances of the case include matters such as: (i) whether or not the mental harm was suffered as the result of a sudden shock;

29 /LVWRI5HFRPPHQGDWLRQV (ii) (iii) (iv) (v) whether the plaintiff was at the scene of shocking events, or witnessed them or their aftermath; whether the plaintiff witnessed the events or their aftermath with his or her own unaided senses; whether or not there was a pre-existing relationship between the plaintiff and the defendant; and the nature of the relationship between the plaintiff and any person killed, injured or put in peril. Paragraphs HFRPPHQGDWLRQ The Proposed Act should embody the following principle: The rules about when a duty to take reasonable care to avoid pure mental harm arises are the same regardless of whether the claim for pure mental harm is brought in tort, contract, under a statute (subject to express provision to the contrary) or any other cause of action. Paragraphs Contributory negligence 5HFRPPHQGDWLRQ The Proposed Act should embody the following principle: In an action for damages for negligently-caused pure mental harm arising out of an incident in which a person was injured, killed or put in peril as a result of negligence of the defendant, any damages awarded shall be reduced by the same proportion as any damages recoverable from the defendant by the injured person (or his or her estate) would be reduced. Paragraphs

APPENDIX B: RECOMMENDATIONS TO BE IMPLEMENTED ON A NATIONALLY CONSISTENT BASIS

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